Expert Column: 10 Ideas to Support Revenue Growth in 2015
As 2015 kicks into full swing, Tara Oberg, senior associate at data-driven consultancy Seurat Group, gives her top 10 list of strategies that supermarkets can use to drive revenue in the coming year.
1. Build Loyalty through trust. The continued rise of natural and specialty grocers displays the value in creating a loyal shopper base by offering products and brands that buyers can be confident about - both in terms of safety and quality. These retailers are creating proprietary rating systems that consumers trust to guide them. Produce, for example, is ranked as Best, Better, Good and Unrated based on farming practices, GMO transparency and other sustainability metrics.
2. Look to frame-breaking channels for inspiration. Retailers across channels have begun to look "behind them," toward smaller, more entrepreneurial channels to stay informed around the latest innovation, macro-trends and consumer preferences. As an example, within the pet industry, Petsmart and Petco continuously learn from smaller players - mom and pop pet stores and local/regional chains - who are more in touch with their pet owner communities and more in tune with requests and preferences.
3. Do more to understand your customers. While many retailers have shopper data, most get surprisingly little out of it. Shopper segmentations are a common way of understanding the subsets of your shoppers. However, this work becomes most actionable when retailers are able to prioritize high-value segments and understand the moment and message necessary to trigger a purchase. This process drastically improves efficiency and simplifies marketing, ensuring it's not just a game of trial and error.
4. Turn double-digit ecomm growth into triple digit. Despite slower adoption of ecommerce for certain grocery categories, online purchase remains an avenue for revenue growth for most retailers, but it needs to be done right. Success in this area comes from being consumer-led and understanding how to connect the array of touch points, from navigational behaviors and purchase drivers to delivery options (home delivery, curb-side pick-up) for your store(s).
5. Partner to most effectively use your data. Collaborative planning is invaluable, and there are often huge benefits from retailers sharing granular purchase behavior data (at the HH level, beyond reports) with go-to partners who have experience working with it. We have seen this kind of data used to create new insights and actions that double the rate of category growth in a market.
6. Be part of your shoppers dinner consideration set. The majority of your customers don’t know what’s for dinner at 3 p.m. "Dinner tonight" is a growing source of wallet that leading retailers are capturing through prepared meals. In fact, the growth of in-store and takeout dining options is outpacing that of foodservice sales as shoppers seek more quality, time-saving options. Invest space and resources in both meeting shoppers’ needs for a convenient dinner to take home and driving impulse hot meal purchases.
7. Cautiously approach shoppers’ "deal only" purchase behavior. Given declining revenue and margins in CPG retail since 2007, retailers have placed a huge emphasis on managing pricing and promotion. More than one-third of packaged food and household products are now sold on discount, meaning that today’s shoppers are trained to purchase on "deal only." Today’s retailers should proceed with care, but shift focus of CRM and merchandising toward value instead of price.
8. Offer shoppers price and value instead of just the lowest price. In the face of a challenging environment to raise prices, retailers can increase revenue by taking a more holistic approach to the total price-value equation and challenging the notion that pricing up or taking product out are the only levers available. Fully understanding the relationship between desired benefits of a product or service and the price paid – the consumer value equation - will allow retailers to better assess which items to carry and how to communicate value message in-store.
9. Leverage private label to win. Another way to appeal to value-seeking shoppers is through a more strategic private label offering. As an example, Wegmans has jumped on board, steadily increasing their store brand assortment to nearly 40 percent share of their in-store offer, leading to greater store loyalty. Similarly, many retailers have created both a value and a premium private label line in order to differentiate themselves. Success will come from fully understanding shoppers’ price and product needs and developing store branded products to best meet them.
10. Appeal to growing customer cohorts by understanding their perception of value. The staggering growth and buying power of Millennials have already made CPG retailers and manufacturers take notice. Winning with this shopper group will depend on retailers’ ability to appeal to their value equation. Millennials, specifically, are less interested in specific brand names, but more interested in what brands stand for, and are more likely to pay more for natural or organic products. A retailer who can offer the right mix of private label products and premium, branded ones will appeal more to this cohort.